These notes are for a landlord proposing to let a property on a shorthold tenancy under the Housing Act 1988, as amended. There are four different forms, though each follows the same format. They deal with the following situations:
- Form 1: furnished house, cottage or bungalow, but not a flat
- Form 2: unfurnished house, cottage or bungalow, but not a flat
- Form 3: furnished flat
- Form 4: unfurnished flat
Forms 1 and 2 assume that there is also a garden, but the relevant parts can be deleted if this is not the case.
Forms 3 and 4 include rights for services which may go with the flat, including the right to use a car parking space.
The circumstances for a letting will vary according to the type of the property and its location. The form chosen by the landlord may well require careful adaptation to suit the circumstances.
The forms do not apply to a letting of part of a property. This would require a different form of Agreement.
There are a number of very helpful official web sites giving advice on letting a property. It is an area which has for some time been much regulated and the landlord should carry out some research beforehand into the regulations. In some cases, the criminal law may apply and so a landlord will not want to face the risk of prosecution. Landlords may find www.direct.gov.uk of help.
THE FORM OF THE AGREEMENT
THE DETAILS ON PAGE 1
The various details in the box on the first page need to be completed. An example of a completed form is included with these notes. A few hints here:
The full name and address of the landlord should be given at the commencement of the Agreement. The address should be in England and Wales and will be the formal address for use by the tenant for service of documents and delivery of other papers to the landlord. A different formal address can be notified to the tenant, if the landlord wishes, under clause 8 of the Agreement.
The landlord will be the owner of the property being let and so, if there is more than one, all of the owners should be included. If the landlord holds the property under a Lease, then the landlord may need the consent of the superior landlord for the letting under the terms of the superior Lease. If the property is mortgaged, then the landlord may need the consent of the lender for the letting under the terms of the loan.
The full name and address of the tenant should be given at the commencement of the Agreement. If there is more than one, then all the tenants should be included.
The full address of the property should be given.
It is usual to have an initial fixed period so that both parties have some degree of certainty. If the initial period is less than six months, the landlord is not entitled ordinarily to end the tenancy until the period of six months has expired. An initial period of six months should, therefore, be the minimum and it may suit the parties to have a longer period.
This is usually a weekly or monthly sum – you need to specify the relevant details. If the rent is a weekly sum but payable monthly, you may want to insert both – e.g.:
“Rent: £100 per week payable monthly in advance at the rate of £433.33 per calendar month.”
RENT PAYMENT DAY
Rent is almost always payable in advance on a pre-agreed date.
FIRST PAYMENT OF RENT
If the rent is payable monthly on the 1st of the month and the tenancy starts part way through the month, you may want to specify the amount as well as the date of the first payment – e.g.:
“First payment of rent: £200 covering the 14 day period from the commencement date to the end of the first month.”
If the landlord intends to take a deposit from the tenant, the amount should be stated here. Notes about this appear later.
This is the rate at which the landlord can claim interest if the tenant is late with any payment. This can be a fixed amount – e.g. 12 per cent a year or a rate calculated by reference to the Bank rate – e.g. 2 per cent p.a. above the Bank of England Base Rate.
TERMS & CONDITIONS
This clause refers back to page 1 of the Terms & Conditions where the definitions are given.
2. THE LETTING
This sets out the basic terms – the landlord grants the tenancy in return for the rent
3. SHORTHOLD TENANCY
This refers to the fact that the letting is a shorthold tenancy and so the relevant legislation applies.
4. TENANT’S OBLIGATIONS
This clause sets out the tenant’s obligations to the landlord under the different headings. The obligations are important as the landlord will be entitled to make a claim to end the tenancy prematurely if any is breached.
The tenant is under an obligation to take good care of the property and may have to carry out repairs or find replacements. It is recommended that the landlord should take photographs of the internal and external parts of the property and support these with a written report. These should be copied to the tenant before the letting takes place. This will avoid any argument later about the extent of any alleged breach of this obligation by the tenant. In addition, it will also mean that the landlord will, at the end of the tenancy, stand more chance of success in deducting from the deposit any costs and expense incurred by the landlord for work which the tenant should have done, as mentioned below.
5. LANDLORD’S OBLIGATIONS
This clause sets out the landlord’s obligations to the tenant. It is usual in a short term letting for the landlord to be responsible for the parts of the property mentioned in sub-clause 2. There are also statutory duties imposed on landlords in respect of the condition of the property and services, including gas appliances.
This sets out the grounds on which the landlord can terminate the tenancy. In order to evict a tenant who is unwilling to leave, a court order will be needed but the procedure is relatively straightforward and shorthold tenants do not have much by way of security of tenure. For more information on this you can go to:
7. APPOINTMENT OF AN AGENT
Some landlords will appoint an agent to collect the rent, keep an eye on the property and so on. The tenant should be notified of this.
This deals with the way in which notices are to be served by the landlord or the tenant
The landlord may like to ask the tenant to pay a deposit at the beginning of the tenancy as a security or bond against the non-payment of the rent or breach of other terms of the tenancy by the tenant. This is not the same as a holding deposit paid by the tenant in advance to secure the letting which should be returned to the tenant when the letting starts.
The deposit should normally amount to one or two months rent. If more, then it may be seen as a premium which is unlawful.
There are regulations governing how the landlord holds the deposit and these are mandatory. There are various types of approved schemes and details should be obtained. The landlord has to notify the tenant of the particular scheme which the landlord has adopted.
The landlord may make a claim to deduct money from the deposit at the end of the tenancy. In this event, proof may have to be given to substantiate the claim, particularly if it relates to alleged breaches of the tenant’s obligations relating to the condition of the property. The claim may go Court or to arbitration, and it is unlikely to be successful without the evidence of photographs and perhaps a written report.
The landlord should look carefully at the insurance policy for the property to see if there are any provisions which are relevant to a letting. It may be necessary for further provisions to be added to the Agreement to cover terms in the policy.
COMPLETION OF THE AGREEMENT
The tenant will want to see a copy of the draft Agreement first and, when this has been agreed, it should be prepared in duplicate. The landlord should sign one copy of the Agreement and the tenant should sign the other, and both should be dated and then exchanged on the day when the tenant is to take up occupation. At the same time, the landlord can collect the rent and the deposit, if it is to be paid. The keys can be handed to the tenant. There is no legal objection to this being done in advance of the commencement date as the parties will be committed once the Agreements are exchanged. However, the commencement date will, of course, be the first day of the Tenancy Period and the keys should not be released until that day as well. In addition, the tenant may prefer not to make the payment of the rent and any deposit until the keys are released.